India reclassifies corn import code, tables tender to buy 500kt

India's on-off corn import saga has taken a new twist as the country's government has moved to reclassify some feed corn imports in order to avoid a prohibitive import tax and meet a plea from the country's poultry sector.

The government has also cleared the way for up to half a million mt of corn to be imported under the 2019/20 TRQ allowance, adding another 400,000 mt to an existing tender for up to 100,000 mt of corn.

"The government of India is allowing 500,000 mt of maize imports... it has changed the HS code of feed corn to take care of the earlier bottleneck for imports," one market source said.

The change to HS codes – a harmonised scheme for identifying international trade categories – enables the corn imports to be considered under a tariff rate quota, meaning it qualifies for a lower rate of import tax.

The measure is something the country's poultry industry has pushed for, as the poor outlook for India's domestic corn crop drove internal prices higher and slashed margins for the poultry sector.

Demand from the poultry industry remains high amid a lack of supply in the domestic market, the official document announcing the change on Tuesday said.

Originally, feed corn would have been imported under the 10059030 HS code denoting pop corn, making it ineligible for relief under the TRQ and facing a prohibitive 60% duty rate.

However, by reclassifying it to 10059011 dent corn, the imports can claim the TRQ rate of 15%.

The 500,000 mt confirmed on Tuesday can be imported only via the tenders held by state companies MMTC and NAFED, with bids invited through to August 31.

Currently, two tenders for corn imports are already open, both for a total of 50,000 mt in 24,000-25,000 mt consignments, with bids to be valid until July 11 for the first tender, and July 16 for the second.

That means more tenders are expected to be opened soon, as the Kharif crop harvest usually starts in September-October, and the volume is likely to be needed before the harvest starts.

With India still stipulating a non-GMO preference, Ukraine is the most likely import origin, with some sources highlighting that the region will be in demand for September new crop corn shipments.

However, there are very few offers available from Ukraine's FOB market for September loading, as the old crop corn has already sold out, while next crop offers are only seen starting from October, as the country's harvest progresses.